An Ontario court has ruled that a truck driver for Ararat Trading Corp. was not an independent contractor but rather a dependent contractor.
The court found that I.H., who had driven for Ararat Trading from May 2018 to December 2019, was entitled to compensation for his final pay cheque without deductions for damages to a refrigeration unit, despite the employer’s claims to the contrary.
Contractual ambiguity and employment status
The case centred on whether I.H. was an employee, an independent contractor, or a dependent contractor under common law. I.H. had operated through his own numbered company, 1059302 Canada Inc., and billed Ararat Trading for his services.
However, the court found that the nature of his work, which involved using Ararat Trading’s truck, adhering to company policies, and relying on Ararat Trading for his primary income, indicated a dependent contractor relationship.
“Dependency and exclusivity are key issues considered in determining an employment relationship,” the court noted. The judge emphasized that I.H.’s dependency on Ararat Trading for his livelihood and the degree of control the company had over his workday experience were critical factors.
The accident and the disputed damages
A contentious point in the case was an accident on Sept. 27, 2019, which resulted in significant damage to a refrigerated unit, or Reefer, attached to the top of the company truck. Ararat Trading sought $27,362.95 for the cost of replacing the damaged Reefer, asserting that I.H. was responsible for the damages.
The company had deducted $2,000 from his final pay cheque as a contribution towards these costs.
I.H. testified that he had never been told he needed to obtain insurance coverage for the truck or the Reefer. He maintained that Ararat Trading had agreed to cover such damages, which was consistent with the company’s past behaviour of covering damages from minor accidents.
The court sided with I.H., stating, “If Ararat Trading’s accountant had required (him) to produce proof of insurance coverage, then it is logical to expect Ararat Trading to prohibit (him) from driving its truck unless and until he provided such proof.”
Constructive dismissal claim
I.H. also claimed constructive dismissal, arguing that Ararat Trading’s delays in issuing his pay cheques constituted a significant change to his contract, forcing him to quit. He testified that the delays, which often meant he received his cheque later in the week instead of on the agreed-upon Monday, caused financial strain and led to his decision to leave.
However, the court found that I.H. had not proven that a specific pay-day was a term of his contract. The evidence showed that while cheques were typically issued at the beginning of the week, there was no consistent pattern to support his claim of a contractual obligation. “The actual practice of Ararat Trading reinforces (the employer’s) testimony that the company did not agree to pay the Plaintiff’s numbered company every second Monday,” the judge stated.
Court’s final decision
The court ultimately dismissed I.H.’s claims under the Employment Standards Act for unpaid wages, vacation pay, termination/severance pay, and overtime pay. However, it found in favour of I.H. regarding his final pay cheque.
Ararat Trading’s claim for damages was dismissed, and the company was ordered to pay I.H. the full amount of his last invoice without deductions.
“The Plaintiff’s Claims at paragraph 1 of his Statement of Claim for payment of unpaid wages, overtime pay, vacation pay, termination/severance pay claimed under the Employment Standards Act and Regulations, is dismissed,” the court ruled. “The Defendants’ Claim is dismissed.”
The precise amount of I.H.’s final pay cheque remains to be determined, with both parties instructed to provide written submissions on the amount and any applicable pre-judgement interest.
For more information, see Halfin v Ararat Trading (2002) Corp., 2024 CanLII 71191 (ON SCSM)
